Tether, the third-largest cryptocurrency in the world by market cap, has reportedly helped recover $87 million worth in USDT to date, sent to wrong addresses by its users.
According to a report shared by ‘The Block’, Tether, the entity behind the top-rated USD-pegged stablecoin ‘USDT’ has helped its users recover $87 million from wrong addresses. The information was shared by the company’s CTO Paolo Ardoino during an interview recently.
Inexperienced crypto traders and investors often find it challenging to transfer cryptocurrencies from one wallet to another. It’s the long wallet addresses that are to be blamed in most cases. They’re almost impossible to remember and a small mistake of even one character can cause funds transfer to an incorrect wallet address. Thankfully, Tether comes to the rescue of such users and helps them recover their tokens.
Tether accomplishes this through a recovery mechanism that enables it to blacklist wallet addresses on the Tron and Ethereum blockchains. These two are the most commonly used networks for processing USDT transfers. Tether freezes the funds held in the concerned wallet addresses, followed by issuance of new USDT tokens to the impacted users.
Offering more details on the process, Adroino said, “Some users make mistakes when sending tokens to DeFi [decentralized finance] projects or trading platforms, which result in tokens being sent to smart contracts or addresses that do not have the functionality to recover the funds.”
“As part of the recovery process, Tether has to blacklist the address in order to recover a token. This revokes all USDT held by that address and reissues an equivalent amount of USDT to an escrow address in order to process and return funds to their rightful owners. To be safe, Tether requires confirmation of ownership, among other information, to start the recovery,” he further stated.
There’s a cost attached to this service
It should be noted that Tether’s above-detailed recovery process has a cost attached to it. As per information available on the token issuer’s official website, it charges a fee of up to 10% of the recovery amount or a flat $1,000 (whichever is higher) for USDT recovery. This implies that the company has so far earned up to $8.7 million in fees for recovering the said $87 million.
Apart from blocking wallet addresses for recovery purposes, Tether also blacklists them owing to regulatory requirements. For example, earlier this month it blocked three prominent Ethereum addresses that held more than $160 million worth of USDT in them.